Box 1 of your W-2 should be lower than boxes 3or5....so Combat pay is not included in your Federal income. (It should never happen anyhow)
(Though, I admit I don't have the NY software installed myself) Usually the software takes care of it automatically.
Does the NY software deal with Combat pay automatically...as long as income properly removed from box 1 of the W-2?
If your combat pay is not included in box 1 of your W-2, you should not enter anything for Combat Pay Included in Federal Income, because you do not have any combat pay included in your federal income. As long as the combat pay is not included in box 1 of your W-2, it will not be included in the income on your New York tax return.
TurboTax asks the question because New York allows you to subtract from your New York income any combat pay that was included in the income on your federal tax return. I don't know under what circumstances you might have combat pay included in your federal income. If it's not included in box 1 of your W-2, it's not included in your federal income.